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Thursday, 16 April 2015

GEOPOLITICS, AUSTERITY AND NEO-LIBERALISM: GREECE, the EU and the US

Until very recently, the media throughout the world called the Greek SYRIZA
party everything from “far left” to “radical far leftwing”. Once the center-left party with a mass base
made up of middle class and workers took power in Greece in late January 2015,
it was very clear that the leftist rhetoric was indeed critical of austerity
and neoliberal policies. Euphoria abounded within Greece and throughout the
world among anti-austerity and anti-neoliberals who believed that growth and
development were sacrificed for the sake of capital concentration at home and
abroad. Very quickly, however, SYRIZA fell in line under pressure from the
international media, domestic and foreign businesses, and of course from
governments especially Germany, but also the US and even China that demanded
conformity.

The mass media as well as independent blogs around the world have analyzed
the political, social and economic consequences of the Greek public debt crisis
more than they have other countries, including Spain and Ireland that are far
more significant in terms of economic impact to the EU than Greece. One reason for
this obsession is that Greece has been technically bankrupt since May 2010.The possibility of an unmanaged and
uncoordinated bankruptcy could possibly throw the EU economy off by at several
hundred billion to as much as a trillion euro, assuming it leaves the euro zone.
This would then open the road for the neo-Fascist French National Front to demand
that France exist the EU, thus threatening the integrity of the European Union
with the inevitable consequence of a cheap reserve currency that would result
in disequilibrium in European balance of payments and disequilibrium in world
trade.

The theme of the mass media representing big business has been very simple:
Greece must accept austerity and neoliberal policies regardless of the cost to
the vast majority of its people because it has no choice for the greater good
of the markets. The alternative (economic nationalism with a mix of mild
social-democratic measures) to EU integration is much worse and it sets a terrible
precedent for other EU members and non-members. Trying to drive fear into the
politicians, military, business community and ordinary citizens of Greece has
actually succeeded. This despite the very obvious result of austerity making
the economy much weaker, finances becoming even more strenuous, and the social
fabric disintegrating as Greece has a much higher percentage of poverty rate
than Argentina; a country that the Western media and governments have targeted
for derision and isolation.

The burden for all of this would fall not just on Greece but actually on
Germany that has in fact driven the country into a corner either to accept
austerity and neoliberal policies no matter the degree to which the workers,
middle class and social security recipients become impoverished. The
propagandistic rhetoric on the part of the Western media that it really means
nothing to the EU in case of a Grexit is very hollow and economists know this
as well as politicians. Grexit will set off another global recession amid a GDP
slowdown in Asia and stagnation in Europe and Australia impacted by the
slowdown in China.

Complicating matters, the reality is that Greece is financially dependent
on Germany but militarily dependent on the US with which it had a long-standing
alliance from the Truman Doctrine to the present. This dual dependence is the
reason for the intrusive role of the US in this matter, much to the dismay of
the German government that resents Washington playing its military protector
card. The debt crisis was the result of Western banks and the European Central
Bank cutting off Greece from liquidity it needed to continue functioning, making
borrowing very expensive after rating agencies downgraded it bands and the
private market because too expensive.

Between 2015 and 2022,
servicing the public debt amounting to about $365 billion is simply not
possible under existing conditions, that is, in the absence of some kind of a
new arrangement that would permit the government to meet its domestic
obligations and public debt. In 2015 alone, debt service is about $30 billion,
in country with GDP of about 175 billion euro. In other words, debt service for
2015 alone represents approximately 13% of GDP. The IMF and European Central
Bank are due to receive half of the payments and the other half for holders of
treasury bills, which include entities from Greek banks to the Chinese
government. Prime Minister Alexis Tsipras delivered the following speech on the
debt, explaining why the EU and IMF must reconsider their position on austerity
and loan conditionality that impacts all levels of policy in Greece.

In 2010, the Greek state ceased to be able to service its debt.
Unfortunately, European officials decided to pretend that this problem could be
overcome by means of the largest loan in history on condition of fiscal
austerity that would, with mathematical precision, shrink the national income
from which both new and old loans must be paid. An insolvency problem was thus
dealt with as if it were a case of illiquidity. In other words, Europe adopted
the tactics of the least reputable bankers who refuse to acknowledge bad loans,
preferring to grant new ones to the insolvent entity so as to pretend that the
original loan is performing while extending the bankruptcy into the future.
Nothing more than common sense was required to see that the application of the
‘extend and pretend’ tactic would lead my country to a tragic state. That
instead of Greece’s stabilization, Europe was creating the circumstances for a
self-reinforcing crisis that undermines the foundations of Europe itself.

From the birth of the Bretton Woods system that created the International
Monetary Fund (IMF) and the World Bank, debtor nations unable to service their
debt because borrowing becomes too expensive must follow a regime of fiscal
austerity, higher indirect taxes falling on the workers and middle class, and
drop in living standards owing to slashing of wages, social programs and rise in
both cost of goods and taxes.

Presumably, this monetarist model would be the panacea for the debtor
nation. However, in the last fifty years countries under austerity winds up in
transferring massive wealth by servicing the public debt and capitalists taking
money overseas, thus leaving the debtor nation poorer, its asset values –
everything from real estate and businesses to wage rates – much lower thus
permitting massive domestic and foreign capital to take over and concentrate
wealth even more than before. The end result is greater external dependence. In
the case of Greece, however, we have a country financially dependent on North-West
Europe, especially Germany, but militarily dependent on the US.

This contradiction of split dependence has cause some friction between
Germany and the US, because the former was strict compliance with austerity and
neoliberal policies that would ensure Greece as a neocolonial dependency, while
the US is concerned that the geopolitical value of Greece is more significant
than its economic amounting about 2% of the EU GDP. The objective of Washington
has been to keep Greece militarily integrated into the West, to make sure it
continues to keep up with military budget as NATO prescribes, and not deviate
at all by trying to explore the Russia and Chinese cards as symbolic counter-weights
to the West.

The US naval bases in Crete and US intelligence operations in the country
are more valuable to Washington than Germany trying to prevail over Greece to
the point of driving it away from the West and to the point of endangering its
internal political and social stability. In November 2012, the conservative
government of Antonis Samaras hired the notorious Blackwater security services
(mercenaries) now known as Academi infamous for its clandestine operations in
Iraq, Afghanistan, Syria, Abu Dhabi, Libya, Ukraine, and a number of African
countries. This is a security company with deep links both to the US government
(Central Intelligence Agency) and the corporate world, but it also has ties
with governments around the world.

Under contract to work with the police to make sure the regime is protected,
Blackwater acted from behind the scenes, indicative of how fearful both the
pro-austerity conservative regime and the US were about the country lapsing
into revolutionary chaos. This is the same Blackwater that has four of its
operatives recently sentenced to prison because in 2007 they killed 14 Iraqi
civilians, albeit operating under contract with the US government that has used
their services for “contract work” in many countries. What the company
describes as “logistical support services” are in essence privately contracted
counter-insurgency operations, including assassinations according to the New York Times (C.I.A. Sought Blackwater’s Help to Kill
Jihadists” Mark
Mazzetti, 19 August 2009) on behalf of governments and
multinational corporations that fear popular opposition to policies that result
in exploitation of labor, natural resources, and environmental degradation.

For obvious reasons, the contract between Greece and Blackwater was kept
secret until the Greek Ambassador to Canada let it slip out in one of his
public appearances. The conservative government of Antonis Samaras never
admitted that Blackwater was operating in Greece. SYRIZA as opposition knew
that this mercenary company operated in a number of trouble spots around the
world on behalf of the US and other governments. SYRIZA was concerned that
Blackwater had a key role in preparing the Greek police and military for the
possibility of suppressing the popular expression of democracy through
grassroots organizing.

While Tsipras was willing to accept Greek military dependency and US
strategic interests, he hoped in exchange Washington would help the government
dealing with Germany and the IMF. The center-left government of SYRIZA,
essentially a collection of leftist academics, former PASOK party members and
some former euro-Communists, found the hard way that as long as Greece remains
in the EU, Germany determines the terms of the integration model, which means
Germany determines austerity and neoliberal policies for the member nations. It
is not clear if SYRIZA expected the IMF, EU and the media to make compromises
just because there was a tacit understanding Athens would retain its strategic
loyalty to the US-NATO. In reality, SYRIZA found out the hard way that dealing
with hard-core “political and economic criminals”, as some of its officials
called them when in opposition, means the latter have vast experience imposing
their will over periphery debtor countries.

Cornered by the immense pressure of the German-led coalition, by the
wealthy Greek elites, the conservative political parties and the military,
SYRIZA simply accepted austerity and neoliberal policies, asking for terms that
could be met in servicing the debt and domestic policies that would not further
entail higher unemployment currently at 26% and more wage, benefit and social
security cuts. Trying to use the Russian card with a visit and a natural gas
deal meant very little, although Athens has asked both Beijing and Moscow to
purchase treasury bills. The faint attempt to use the US as the country’s
military patron as a counterweight to Germany has not worked well either. Alexis
Tsipras is not Josip Broz Tito and Greece is not Yugoslavia that could play
East against West, and the leverage he has is limited to geopolitical issues in
a tumultuous part of the world.

On 15 April 15, 2015, the Reuters Moscow office reported that Greece is
negotiating to purchase S-300 missiles. Although this may be a shock to the
Western anti-Russian media, Athens has used as part of its air defense system
in the last two decades. The irony here is that Vladimir Putin promised better
terms on natural gas sales to Greece, but the quid pro-quo was weapons
purchases from Russia must be part of the deal. This is exactly what France and
Germany have been doing with Greece from 2010 until the present when Greece has
been under austerity. The Western media is critical of this deal asking “where is Greece finding the money to buy
S-300 missiles”, the same ones that Moscow recently decided to sell to Iran
amid the final stages of the US-Iran deal on nuclear weapons development.

The larger question is why is Greece under a supposedly leftist SYRIZA
government continuing to spend on defense at rates about the same as before
austerity (about 3% of GDP, or one of the highest in the world, while the EU
average is under 2%)? Once again, there has been immense pressure on Athens by
Germany and the US not to cut defense, just wages, social security benefits,
social programs, especially health care and education. Tsipras decided to cut a
deal with Putin that essentially is not much different than the quid pro quo
deals Greece has with the West, hoping Russia increases trade with Greece and
purchases T-Bills while discounting natural gas sales.

The US wants Greece in the EU for strategic reasons, and it would not mind
if Germany makes a few symbolic concessions to show that it is not a heartless neo-colonial
power in Europe as its critics have portrayed it. However, Greek politicians
and analysts are deluding themselves if they assume that the US would sacrifice
its relationship with Germany to support Greece on austerity and neoliberal
policies. The most likely scenario is that SYRIZA will cave into German-US
pressure to conform on austerity and neoliberal policies. A more distant
possibility is everything from referendum to new elections that would not
really solve anything, to Greece leaving the EU eventually.

The lesson of Greece to the rest of the world is that the so called
“leftist” SYRIZA party that had promised to end austerity and neoliberal
policies was unrealistic. The result was following in the footsteps of the
conservatives and PASOK socialists that alternated ruling the country in the
last forty years and followed policy dictates of the EU (Germany) and IMF. The
disillusioned voters of SYRIZA that has blatantly lied about what policies it
would pursue once in power have nowhere to go. SYRIZA lacks ideological
cohesion as there are elected officials and ministers that range from the
traditional liberal center within the Greek context to the Socialist –
Euro-Communist wing of the Greek Communist Party after it split. The cacophony
of disparate voices accounts for confusion among voters. The political and
ideological heterogeneity has been deliberate so the party can reach a wide
voter base. As PM and head of the party, Tsipras has opted to isolate the left
when it comes to financial and economic policy, but engage it only on certain
social issues such as illegal immigration, and to deliver a leftist message to
the people desperate for radical solutions. Andreas Papandreou in the 1980s was
a master at this political game, and it seems that young Tsipas is following in
the footsteps of the former PASOK leader who at least managed to create a
middle class through inflationary policies and foreign borrowing when Greece
enjoyed monetary sovereignty.

The message that SYRIZA’s volte face sends to Europe is that no EU member
can possibly challenge German hegemony, largely because the entire capitalist
world support austerity and neo-liberalism. In other words, beyond the small
confines of Greece, it was important for Germany to demonstrate its economic
and political power so that its integration model based on patron (Germany)
client (periphery EU members) relationship will continue and make Germany even
stronger while enriching European banks and multinational corporations that
support austerity and neoliberal policies.

The Greek Communist Party (KKE), the only Stalinist
remnant of the Cold War in Europe with a mere 5% popular voter support, had
warned the voters that the SYRIZA option to remain integrated into the EU meant
there would be no solution much different than what Greece had under PASOK and
New Democracy (both neoliberal) governments in the past. Greece under SYRIZA
learned reformism does not work any more today than it did in the 19th
or 20th century because leverage rests with the counter-reformist
political and economic powers. Reformism works only when it starts with the
core capitalist countries, not the periphery. This does not mean that SYRIZA
did not have options to exercise or that it is now too late to take bold steps.
It only means that it is just another conventional bourgeois political party
opting for more “enlightened capitalist” solutions within the system in a world
made up of predatory capitalists and their neoliberal political
representatives.

One scenario that the foreign creditors, domestic wealthy elite and the neo-liberal politicians have in mind involves a simple co-optation strategy of SYRIZA by the neoliberal elements. This means that eventually a new SYRIZA emerges without the left-wing minority that would go off to fom its own party perhaps with other smaller parties. The neoliberal PASOK, the "cloned PASOK" known as POTAMI (River) join forces with the rump pro-EU SYRIZA and government togetgher with a neoliberal agenda that IMF, ECB and Germany prescribe in order to maintain the domestic elites in solid control of the economy and keep the nation tightly dependent on northwest Europe. This may or may not take place, but co-optation of SYRIZA's moderate wing has been on the agenda even of the conservative New Democracy Party (led by right winger Samaras) for the last three years.

At the other end of possibilities, very remote indeed, is a mass uprising that invites the role of the armed forces as it will most likely fail owing to absence of grassroots leadership and organization. In the last analysis, nationalism is a much stronger sentiment in the political culture and the media as well as the neoliberal supporters have been using it to manipulate public opinion to support austerity and neoliberal policies, no matter hoe detrimental to the middle class, workers, and social security recipients. SYRIZA has also used this issue directly by making the IMF-EU austerity-neoliberal agenda a problem between Greece and Germany, instead of one that places international and domestic capital against workers regardless of whether they are Greeks or Germans. As legitimate as it is, the German war repparations issue that SYRIZA has raised is really to co-opt the nationalist agenda and make the masses feel a sense of patriotic identification with their government. The old strategy of using nationalism to kill class solidarity and refuse any concessions for social justice still works.

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